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Performance audit, Humboldt Unified School District

Performance audit, Humboldt Unified School District

Performance Audit
Humboldt Unified
School District
Division of School Audits
Debra K. Davenport
Auditor General
July • 2012
Report No. 12-07
A REPORT
TO THE
ARIZONA LEGISLATURE
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators and
five representatives. Her mission is to provide independent and impartial information and specific recommendations to improve the
operations of state and local government entities. To this end, she provides financial audits and accounting services to the State and
political subdivisions, investigates possible misuse of public monies, and conducts performance audits of school districts, state
agencies, and the programs they administer.
The Joint Legislative Audit Committee
Audit Staff
Ross Ehrick, Director
Mike Quinlan, Manager and Contact Person
Judy Fitzgerald
Chris Moore
Brian Smith
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
Representative Carl Seel, Chair
Representative Tom Chabin
Representative Justin Olson
Representative David Stevens
Representative Anna Tovar
Representative Andy Tobin (ex officio)
Senator Rick Murphy, Vice Chair
Senator Andy Biggs
Senator Rich Crandall
Senator Linda Lopez
Senator David Lujan
Senator Steve Pierce (ex officio)
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
MELANIE M. CHESNEY
DEPUTY AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
July 9, 2012
Members of the Arizona Legislature
The Honorable Janice K. Brewer, Governor
Governing Board
Humboldt Unified School District
Dr. Paul Stanton, Superintendent
Humboldt Unified School District
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Humboldt
Unified School District, conducted pursuant to A.R.S. §41-1279.03. I am also transmitting within
this report a copy of the Report Highlights for this audit to provide a quick summary for your
convenience.
As outlined in its response, the District agrees with all of the findings and recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on July 10, 2012.
Sincerely,
Debbie Davenport
Auditor General
In fiscal year 2010, Humboldt USD
operated efficiently with lower operational
costs than peer districts. The table on
page 2 highlights the District’s efficiencies
in each of the operational areas.
Much lower administrative costs—
Humboldt USD’s administration operated
efficiently with costs that were 26 percent
lower per pupil than peer districts’, on
average. These costs were lower primarily
because the District employed fewer
administrative staff at its schools and paid
lower salaries for some administrative
positions. Humboldt USD’s lower staffing
was primarily in administrative support
positions at school sites, including
administrative secretaries and
District operated efficiently
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
Higher student achievement and efficient operations
Our Conclusion
In fiscal year 2010,
Humboldt Unified School
District’s student
achievement was higher
than both its peer districts’
and state averages, and
the District operated
efficiently. The District’s
per-pupil costs in
administration and plant
operations were much
lower than peer districts’,
and although its per-pupil
costs for food service and
transportation were similar
to peer districts’, it
operated these programs
efficiently with lower costs
per meal and lower costs
per mile and per rider. The
District generally has lower
staffing levels and salaries
than peer districts’ and
has implemented many
effective techniques and
practices to help keep its
costs low and programs
operating efficiently.
However, the District
needs to strengthen
controls over its computer
systems.
Student achievement higher than
peers’ and state averages—In fiscal year
2010, Humboldt USD’s student AIMS
scores were higher than both peer
districts’ and state averages. Further, eight
of the District’s nine schools met
“Adequate Yearly Progress” for the federal
No Child Left Behind Act, and the
District’s 82-percent high school
graduation rate was slightly higher than
the peer districts’ average of 80 percent
and the state average of 78 percent.
District operated efficiently with costs
lower than or similar to peer districts’—
In fiscal year 2010, Humboldt USD
operated efficiently with per-pupil costs
that were lower than or similar to peer
districts’ costs in all operational areas. The
District’s administration and plant
operations costs were much lower than its
peer districts averaged. Further, although
the District’s per-pupil costs for food
service and transportation were similar to
peer districts, Humboldt USD operated
these programs efficiently with lower costs
per meal and lower costs per mile and per
rider than peer districts.
Operating efficiently allowed the District to
spend more of its available resources for
instructional purposes, which was
especially important for Humboldt USD
because the District’s fiscal year 2010
per-pupil operational spending of $6,432
was $664 less per pupil than its peer
districts’ and one of the lowest per-pupil
spending amounts in the State. Humboldt
USD had less money available primarily
because it did not receive additional
funding through voter-approved budget
overrides to increase its budget and
chose to budget less of its capital monies
for operational purposes.
2012
July • Report No. 12-07
Humboldt Unified
School District
Operational
Area
Humboldt
USD
Peer Group
Average
Administration $556 $748
Plant operations 697 874
Food service 328 322
Transportation 380 396
Per-Pupil Expenditures by
Operational Area
Fiscal Year 2010
Percentage of Students Who Met or
Exceeded State Standards (AIMS)
Fiscal Year 2010
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Math Reading Writing
Humboldt USD Peer Group State-wide
Humboldt USD needs to improve controls over its
computer systems in three ways. First, the District
needs to separate the incompatible job duties of
having the system administrator for the accounting
system also be a user of the system. Second, the
District needs to strengthen password requirements.
Third, the District needs to develop and implement
a disaster recovery plan. Although no improper
transactions were detected in the sample we
reviewed, these improvements are necessary to
help prevent fraud and abuse, protect sensitive
information, and ensure continuity of operations in a
disaster.
Recommendations—The District should:
••Separate the system administrator duties from
the business office functions.
••Implement and enforce password requirements.
••Create and implement a formal IT disaster
recovery plan.
District needs to strengthen controls over its computer systems
receptionists. Further, Humboldt USD’s high-level
administrators, such as the superintendent,
business manager, and principals, were paid less
despite generally having a similar number of years
of experience in their respective positions as the
audited peer districts’ administrators.
Efficient plant operations—Humboldt USD’s plant
operations costs were 10 percent lower per square
foot and 20 percent lower per student than peer
districts’. These lower costs were primarily because
of lower staffing levels, lower salaries, and lower
energy costs.
Efficient food service program—Humboldt USD’s
$2.19 cost per meal was much lower than the peer
districts’ average of $2.66 per meal. By maintaining
a low cost per meal, the District was able to cover
all of its program costs, while having enough
monies remaining to help pay for some indirect
costs, such as utilities. The lower costs were
primarily the result of lower food costs, which the
District has helped keep low by implementing
several effective cost-controlling techniques.
Specifically:
••Fully use commodities—To help take full
advantage of the commodities program, the
District purchased an additional freezer and
created additional dry storage space so that
it can receive large amounts of commodities.
Further, the District requests and accepts
additional commodities when they become
available.
••Prepare menus to use available food
inventory—The District reviews its food
inventory and modifies the cafeteria menus to
minimize food waste and limit the purchase of
noncommodity food items.
••Offer some every-day menu options—Although
the District offers five or six meal choices to
students on a daily basis, it is still able to keep
its costs low by limiting food waste. Several
of the same meal options are offered every
day and some of these every-day options are
the type of meals that can be refrigerated until
needed and served the following day if unsold.
••Monitor meal demand to limit waste—The
District monitors the number of meals produced
and served by specific meal type and uses
this information to determine the appropriate
amount of food items to order and the number
of meals to prepare the next time specific meals
are served.
Efficient transportation program—Humboldt
USD’s transportation program operated efficiently
with a $2.36 cost per mile that was 31 percent lower
than the peer districts’ and a $709 cost per rider
that was 24 percent lower than the peer districts’.
These lower costs were primarily the result of lower
salaries, repair and maintenance costs, and fuel
costs.
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
July 2012
A copy of the full report is available at:
www.azauditor.gov
Contact person:
Mike Quinlan (602) 553-0333
Humboldt Unified
School District
Efficiency Measure
Humboldt
USD
Peer
Group
Average
Administrative cost per pupil $556 $748
Plant operations cost per square foot 5.11 5.70
Food service cost per meal 2.19 2.66
Transportation cost per mile 2.36 3.40
Transportation cost per rider 709 937
Comparison of Efficiency Measures
Fiscal Year 2010
TABLE OF CONTENTS
continued
page i
Office of the Auditor General
District Overview 1
Student achievement higher than state and peer districts’ averages 1
District operated efficiently with costs lower than or similar to peer districts’ 1
Finding 1: District operated efficiently 3
Much lower administrative costs 3
Efficient plant operations 3
Efficient food service program 4
Efficient transportation program and proper controls over fuel purchase cards 5
Finding 2: District needs to strengthen controls over its computer
systems 7
Business office employee has incompatible job duties 7
Password requirements need to be strengthened 7
Lack of disaster recovery plan could result in interrupted operations or loss of data 8
Recommendations 8
Appendix
Objectives, Scope, and Methodology a-1
District Response
TABLE OF CONTENTS
concluded
page ii
State of Arizona
Tables
1 Per-Pupil Expenditures by Operational Area
Fiscal Year 2010
(Unaudited) 2
2 Comparison of Efficiency Measures
Fiscal Year 2010
(Unaudited) 3
Figure
1 Percentage of Students Who Met or Exceeded State Standards (AIMS)
Fiscal Year 2010
(Unaudited) 1
page 1
Office of the Auditor General
DISTRICT OVERVIEW
Humboldt Unified School District is located near Prescott in Yavapai County. In fiscal year 2010, the
District served 5,877 students at its nine schools: five kindergarten-through-6th-grade elementary
schools, two 7th-through-8th-grade middle schools, one 9th-through-12th-grade high school, and
one kindergarten-through-8th-grade traditional school.
Overall, in fiscal year 2010, Humboldt USD compared favorably with peer districts in both student
achievement and operational efficiencies.1 The District’s student achievement was higher than both
its peer districts’ and state averages. Additionally, it operated efficiently, spending much less per
student than peer districts on administration and plant operations. Further, its food service program
operated efficiently with a much lower cost per meal, and its transportation program was efficient with
a much lower cost per mile and cost per rider. The District’s overall per-pupil spending was also lower
than the state and peer districts’ averages.
Student achievement higher than state and peer districts’ averages
In fiscal year 2010, 66 percent of the District’s students met or exceeded state standards in math, 82
percent in reading, and 78 percent in writing. As shown in Figure 1, these scores were higher than
the state and peer districts’ averages. Further, eight of the District’s nine schools met “Adequate
Yearly Progress” (AYP) for the federal No Child Left Behind Act. Humboldt USD’s high school failed
to meet AYP because some students did not demonstrate sufficient academic progress and its
76-percent high school graduation rate in fiscal year 2009 was below the target rate. The District’s
82-percent high school graduation rate in fiscal year
2010 was slightly higher than the peer group average of
80 percent and also higher than the state average of 78
percent.
District operated efficiently with costs
lower than or similar to peer districts’
As shown in Table 1 on page 2, in fiscal year 2010,
Humboldt USD operated with much lower per-pupil
costs in administration and plant operations than its
peer districts’. Further, although the District’s per-pupil
1 Auditors developed two peer groups for comparative purposes. See page a-1 of this report’s Appendix for further explanation of the peer
groups.
Figure 1: Percentage of Students Who Met or
Exceeded State Standards (AIMS)
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2010 test results
on Arizona’s Instrument to Measure Standards (AIMS).
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Math Reading Writing
Humboldt USD
Peer Group
State-wide
page 2
State of Arizona
costs for food service and transportation were similar to peer
districts, Humboldt USD operated these programs efficiently
with lower costs per meal and lower costs per mile and per rider
than peer districts. Operating efficiently allowed the District to
spend more of its available resources for instructional purposes,
which was especially important for Humboldt USD because the
District’s fiscal year 2010 per-pupil operational spending of
$6,432 was $664 less per pupil than its peer districts’ and one
of the lowest per-pupil spending amounts in the State. Humboldt
USD had less money available primarily because it did not
receive additional funding through voter-approved budget
overrides to increase its budget and chose to budget less of its
capital monies for operational purposes. In fiscal year 2010,
Humboldt USD spent 57.5 percent of its available operating
dollars in the classroom compared to the 54.8-percent peer
district average and 55.9-percent state average.
Much lower administrative costs—Humboldt USD’s
administrative costs were 26 percent lower per pupil than peer districts averaged—$556
compared to $748. The District spent less on administration primarily because it employed
fewer administrative staff and paid some administrators lower salaries (see Finding 1, page
3).1 The District should, however, strengthen some of its computer controls (see Finding 2,
page 7).
Efficient plant operations—The District’s plant operations cost of $5.11 per square foot
was 10 percent lower than the peer districts’ average and its $697-per-student cost was 20
percent lower. The District spent less on plant operations primarily because it staffed fewer
plant employees and paid lower salaries. Further, the District’s energy costs were lower likely
because of its efforts to control electricity consumption (see Finding 1, page 3).
Efficient food service program—Although it spent a similar amount per pupil for food
service as its peer districts, Humboldt USD’s food service program operated efficiently with
a cost per meal of $2.19, which was much lower than the peer district’s average of $2.66. The
District controlled costs and maintained a self-sufficient program by fully using federal
commodities and closely monitoring the program (see Finding 1, page 3).
Efficient transportation program—Although it spent a similar amount per pupil for
transportation as its peer districts, Humboldt USD’s transportation costs were 31 percent
lower per mile and 24 percent lower per rider. Further, the District’s routes were reasonably
efficient, filling buses to 75 percent of seat capacity, on average. The District’s much lower
costs were primarily due to lower pay rates, low costs associated with bus repair and
maintenance, and lower fuel costs. Additionally, the District maintained proper controls over
its fuel purchase cards (see Finding 1, page 3).
1 Within the 11-district efficiency peer group, auditors compared staffing levels, salaries, and longevity among a 6-district subset that
was subject to performance audits for their fiscal year 2010 operations.
Spending
Humboldt
USD
Peer
Group
Average
State
Average
Total per pupil $6,432 $7,096 $7,609
Classroom dollars 3,700 3,889 4,253
Nonclassroom
dollars
Administration 556 748 721
Plant operations 697 874 914
Food service 328 322 366
Transportation 380 396 342
Student support 485 578 581
Instructional
support 286 289 432
Table 1: Per-Pupil Expenditures by
Operational Area
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2010 Arizona
Department of Education student membership data
and district-reported accounting data.
page 3
Office of the Auditor General
District operated efficiently
In fiscal year 2010, Humboldt USD operated efficiently with lower operational costs than peer
districts. The District attained these lower costs primarily by employing fewer staff, paying lower
salaries, and closely monitoring its operations. As shown in Table 2, the District’s efficiency measures
compared favorably to its peer districts. These
low operational costs allowed the District to
spend a similar amount as peer districts spent
in the classroom even though its overall
per-pupil spending was one of the lowest in
the State.
Much lower administrative costs
Humboldt USD’s administration operated
efficiently with costs that were 26 percent lower
per pupil than peer districts’, on average. The
District was able to operate with lower
administrative costs primarily because it
employed fewer administrative staff at its schools and paid lower salaries for some administrative
positions. Humboldt USD employed one administrative full-time equivalent (FTE) position for every
106 students while the peer districts employed one FTE for every 95 students, on average. Humboldt
USD’s lower staffing was primarily in administrative support positions at school sites, including
administrative secretaries and receptionists. Further, in reviewing detailed information for the six
audited peer districts, Humboldt USD’s high-level administrators, such as the superintendent,
business manager, and principals, were paid less despite generally having a similar number of years
of experience in their respective positions as the audited peer districts’ administrators.
Efficient plant operations
Humboldt USD’s plant operations were efficient with lower costs per square foot and per student
than the peer districts’. Its $5.11 cost-per-square-foot was 10 percent lower than the peer districts’
and its cost per student was 20 percent lower. The District’s lower costs were primarily because of
lower staffing levels, lower salaries, and lower energy costs.
FINDING 1
Efficiency Measure
Humboldt
USD
Peer
Group
Average
Administrative cost per pupil $556 $748
Plant operations cost per square foot 5.11 5.70
Food service cost per meal 2.19 2.66
Transportation cost per mile 2.36 3.40
Transportation cost per rider 709 937
Table 2: Comparison of Efficiency Measures
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2010 district-reported
accounting and food service program data; Arizona School Facilities
Board square footage information; and Arizona Department of
Education student membership and transportation program data.
page 4
State of Arizona
Fewer staff and lower salaries—In fiscal year 2010, the District employed 53 FTE plant
operations positions, or 1 full-time plant employee for every 15,041 square feet. The five other
peer districts that did not outsource janitorial and grounds maintenance employed an average
of 1 full-time plant employee for every 12,874 square feet. Further, Humboldt USD’s average
plant operations employee salary was 21 percent lower than these peer districts’.
Lower energy costs—The District’s per-square-foot energy costs were 9 percent lower than
peer districts’, in part because of its following efforts to control electricity usage. Specifically:
•• Monitoring energy usage—The District prepares monthly reports of electricity costs and
usage by campus to help monitor energy usage. The District’s plant operations employees
closely monitor these reports, comparing monthly usage over the past several years, and
investigate any unusual spikes in electricity consumption to determine if the cause might
be something correctable such as poorly operating cooling and heating equipment.
•• Upgrading to energy-efficient equipment—The District made several upgrades to
improve energy efficiency in some buildings, including installing more energy-efficient
lighting, replacing heating and air conditioning units, and installing occupancy sensors
that turn lights on and off depending on whether someone is in the room.
•• Other conservation efforts—The District has also undertaken other efforts to reduce
energy costs, including using natural lighting when possible and installing a program that
automatically shuts off its computers at the end of the day.
Efficient food service program
In fiscal year 2010, the District’s $2.19 cost per meal was much lower than the peer group
average of $2.66 per meal. By maintaining a low cost per meal, the District was able to cover all
of its program costs, while having enough monies remaining to help pay for some indirect costs,
such as utilities. The District’s lower costs were primarily the result of lower food costs, and the
District has implemented several effective techniques and practices for controlling cost.
Specifically:
•• Fully use commodities—The District helps keep its food costs low by fully using United
States Department of Agriculture (USDA) food commodities. Districts participating in the
National School Lunch Program can obtain USDA commodities by paying only a small
shipping charge. Districts receive allocations of USDA commodities based on student meal
participation in the prior year and may also obtain additional available commodities not
used by other participants or when the USDA has large surpluses. To help take full
advantage of the commodities program, the District purchased an additional freezer and
created additional dry storage space so that it can receive large amounts of commodities.
In fiscal year 2010, the District received over $156,000 worth of food commodities. This was
nearly $30,000 more than its allocation of commodities because the District requested and
page 5
Office of the Auditor General
accepted additional commodities when they became available. During fiscal year 2010, the
value of the commodities the District received was 20 percent more than peer districts’ on a
per-meal basis.
•• Prepare menus to use available food inventory—The District reviews its food inventory and
modifies the cafeteria menus to minimize food waste and limit the purchase of food items.
•• Offer some every-day menu options—Although the District offers five or six meal choices to
students on a daily basis, it is still able to keep its costs low by limiting food waste. Auditors have
found that offering many options increased costs at some other districts. However, Humboldt
USD has managed to keep its food costs low by offering several of the same meal options every
day and some of these every-day options are the type of meals that can be refrigerated until
needed and served the following day if unsold.
•• Monitor meal demand to limit waste—Humboldt USD’s schools each prepares daily
production records that identify the number of meals planned and served by menu option. The
District uses these daily production records to determine the appropriate amount of food items
to order and the number of meals to prepare the next time specific meal options are served.
This helps to limit food and production costs by making only what is needed, and limiting waste.
Efficient transportation program and proper controls over fuel
purchase cards
The District’s transportation program operated efficiently with a $2.36 cost per mile that was 31
percent lower than its peer districts’ and a $709 cost per rider that was 24 percent lower than the
peer districts’. Humboldt USD’s lower costs were primarily the result of lower salaries, repair and
maintenance costs, and fuel costs. Further, the District’s routes were reasonably efficient, filling
buses to 75 percent of seat capacity, on average.
Lower salaries—On average, the District paid its bus drivers and mechanics lower pay rates than
the six audited peer districts’. Bus drivers were paid about 10 percent less and mechanics were
paid about 13 percent less.
Lower repair and maintenance costs—The District’s mechanics stated that they make every
effort to perform nearly all bus maintenance and repairs in-house, thereby reducing costs for
maintenance and repair services. Auditors noted that although the District’s buses averaged a
similar age as peer districts’, Humboldt USD spent 43 percent less per mile for bus repair and
maintenance costs.
Proper controls over fuel purchase cards—The District has proper controls over its fuel
cards and closely monitors their usage. The District uses fuel cards to fuel its buses with a local
vendor. To help ensure fuel charges are proper, each fuel card is assigned to a specific bus, and
the driver is required to input the bus number, odometer reading, and a unique and confidential
page 6
State of Arizona
personal identification number when purchasing fuel. The District monitors fuel purchases on
a daily basis by reviewing the transactions on the vendor’s Web site for any unusual purchases.
Further, when the bi-weekly billing is received, transportation staff verify that all transactions
are supported by receipts turned in by drivers. Additionally, the vendor’s system provides the
District with the average miles per gallon for each of its buses, which staff review for
reasonableness and investigate discrepancies.
page 7
Office of the Auditor General
District needs to strengthen controls over its computer
systems
Humboldt USD needs to improve controls over its computer systems in three ways. First, the District
needs to separate the incompatible job duties of having the system administrator for the accounting
system also be a system user. Second, the District needs to strengthen password requirements.
Third, the District needs to develop and implement a disaster recovery plan. Although no improper
transactions were detected in the sample auditors reviewed, these improvements are necessary to
help prevent fraud and abuse, protect sensitive information, and ensure continuity of operations in a
disaster.
Business office employee has incompatible job duties
The district employee who is responsible for administering the District’s accounting system is also a
user of the system as the payroll clerk. As the system administrator, this person has access to all
functions and settings within the accounting system, including adding and modifying employee
information and changing pay rates. In situations where one employee has such access and is also
responsible for processing payroll, there is a greater risk that unauthorized changes, such as
creating fictitious employees or changing employee pay rates, could go unnoticed. Auditors scanned
all employees’ fiscal year 2010 pay for reasonableness and reviewed detailed payroll and personnel
records for 30 of the District’s 921 employees who were paid at least $1,500 and noted no improper
transactions. However, this user access weakens controls that help protect the District against errors,
fraud, and misuse. The District should separate the system administrator duties from the business
office functions and consider assigning the system administrator duties to someone who is not a
user of the system.
Password requirements need to be strengthened
The District needs stronger password requirements for its network, student information system, and
accounting system. Although users generally develop their own passwords, the District has not
established complexity requirements—that is, passwords do not need to be a minimum length or
FINDING 2
page 8
State of Arizona
contain numbers or symbols. Further, users are not prompted to periodically change passwords.
Common practice requires passwords to be at least eight characters, contain a combination of
alphabetic and numeric characters, and be changed every 90 days. These practices would
decrease the risk of unauthorized persons gaining access to the systems.
Lack of disaster recovery plan could result in interrupted
operations or loss of data
The District does not have a formal, up-to-date, and tested disaster recovery plan, even though
it maintains critical financial and student information on its systems and network. A written and
properly designed disaster recovery plan would help ensure continued operations in the case of
a system or equipment failure or interruption. Although the District stores some backup
information offsite, some critical data is stored on storage devices next to the District’s servers.
Further, the District has not attempted to restore data on an offsite system to ensure the
completeness and integrity of its data backup. Disaster recovery plans should be tested
periodically, and modifications should be made to correct any problems and ensure their
effectiveness.
Recommendations
1. The District should separate the system administrator duties from the business office
functions and consider assigning the system administrator duties to someone who is not
a user of the system.
2. The District should implement and enforce password requirements related to password
length, complexity, and expiration.
3. The District should create a formal disaster recovery plan and test it periodically to identify
and remedy any deficiencies. Additionally, all backup tapes should be stored in a secure
offsite location.
APPENDIX
page a-1
Office of the Auditor General
Objectives, Scope, and Methodology
The Office of the Auditor General has conducted a performance audit of the Humboldt Unified
School District pursuant to A.R.S. §41-1279.03(A)(9). Based in part on their effect on classroom
dollars, as previously reported in the Auditor General’s annual report, Arizona School District
Spending (Classroom Dollars report), this audit focused on the District’s efficiency and effectiveness
in four operational areas: administration, plant operations and maintenance, food service, and
student transportation. To evaluate costs in each of these areas, only current expenditures, primarily
for fiscal year 2010, were considered.1 Further, because of the underlying law initiating these
performance audits, auditors also reviewed the District’s use of Proposition 301 sales tax monies and
how it accounted for dollars spent in the classroom.
In conducting this audit, auditors used a variety of methods, including examining various records,
such as available fiscal year 2010 summary accounting data for all districts and Humboldt USD’s
fiscal year 2010 detailed accounting data, contracts, and other district documents; reviewing district
policies, procedures, and related internal controls; reviewing applicable statutes; and interviewing
district administrators and staff.
To analyze Humboldt USD’s operational efficiency, auditors selected a group of peer districts based
on their similarities in district size, type, and location. This operational peer group includes Humboldt
USD and the ten other unified and union high school districts that also served between 2,000 and
7,999 students and were located in cities and suburbs. Within this operational peer group, auditors
developed a subset of six districts that were subject to a performance audit for their fiscal year 2010
operations. Auditors compared the more detailed accounting, staffing level, and longevity data that
was available for these districts. To compare districts’ academic indicators, auditors developed a
separate student achievement peer group using poverty as the primary factor because poverty has
been shown to be strongly related to student achievement. Auditors also used secondary factors
such as district type, size, and location to further refine these groups. Humboldt USD’s student
achievement peer group includes Humboldt USD and the 21 other unified districts that also served
student populations with poverty rates between 17 and 23 percent. Additionally:
•• To assess the District’s student achievement, auditors reviewed the Arizona’s Instrument to
Measure Standards (AIMS) passing rates, “Adequate Yearly Progress” for the federal No Child
Left Behind Act, and high school graduation rates. AIMS passing rates were compared to the
state-wide average and the average of the student achievement peer districts.
1 Current expenditures are those incurred for the District’s day-to-day operations. They exclude costs associated with repaying debt, capital
outlay (such as purchasing land, buildings, and equipment), and programs such as adult education and community service that are outside
the scope of preschool through grade-12 education.
page a-2
State of Arizona
•• To assess whether the District’s administration effectively and efficiently managed district
operations, auditors evaluated administrative procedures and controls at the district and
school level, including reviewing personnel files and other pertinent documents and
interviewing district and school administrators about their duties. Auditors also reviewed
and evaluated fiscal year 2010 administration costs and compared these to peer districts’.
•• To assess whether the District’s plant operations and maintenance function was managed
appropriately and functioned efficiently, auditors reviewed and evaluated fiscal year 2010
plant operations and maintenance costs and district building space, and compared these
costs and capacities to peer districts’.
•• To assess whether the District’s food service program was managed appropriately and
functioned efficiently, auditors reviewed fiscal year 2010 food service revenues and
expenditures, including labor and food costs; compared costs to peer districts’; reviewed
the Arizona Department of Education’s food service monitoring reports; and observed food
service operations.
•• To assess whether the District’s transportation program was managed appropriately and
functioned efficiently, auditors reviewed and evaluated required transportation reports, driver
files, bus maintenance and safety records, bus routing, and bus capacity usage. Auditors
also reviewed fiscal year 2010 transportation costs and compared them to peer districts’.
•• To assess the District’s computer information systems and network, auditors evaluated certain
controls over its logical and physical security, including user access to sensitive data and critical
systems, and the security of servers that house the data and systems. Auditors also evaluated
certain district policies over the system such as data sensitivity, backup, and recovery.
•• To assess whether the District was in compliance with Proposition 301’s Classroom Site
Fund requirements, auditors reviewed fiscal year 2010 expenditures to determine whether
they were appropriate and the District properly accounted for them. Auditors also reviewed
the District’s performance pay plan and analyzed how performance pay was being
distributed. No issues of noncompliance were identified.
•• To assess the District’s financial accounting data, auditors evaluated the District’s internal
controls related to expenditure processing and scanned all payroll and accounts payable
transactions for proper account classification and reasonableness. Additionally, auditors
reviewed detailed payroll and personnel records for 30 of the 921 employees who were paid
at least $1,500 and reviewed supporting documentation for 30 of 16,521 accounts payable
transactions. After adjusting transactions for proper account classification, auditors reviewed
fiscal year 2010 spending and prior years’ spending trends across operational areas. Auditors
also evaluated other internal controls that were considered significant to the audit objectives.
We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
The Auditor General and her staff express their appreciation to the Humboldt Unified School
District’s board members, superintendent, and staff for their cooperation and assistance
throughout the audit.
DISTRICT RESPONSE
DISTRICT RESPONSE
MARIELA KATHLEEN BEAN, PUBLIC RELATIONS/LANGUAGE ACQUISITION DIRECTOR
OFFICE 928.759.5016 • FAX 928.759.4044 • CELL 928.830.1952
HUMBOLDT UNIFIED SCHOOL DISTRICT #22
6411 N. ROBERT ROAD, PRESCOTT VALLEY, AZ 86314 • PHONE 928.759.4000  FAX 928.759.4020
June 25, 2012
Ms. Debra K. Davenport
Auditor General
2910 North 44th Street, Suite 410
Phoenix, Arizona 85018
Dear Ms. Davenport:
The Humboldt Unified School District respectfully submits its response to the Performance Audit
conducted by the Office of the Auditor General for the 2010 Fiscal Year. The District would like to thank
the Auditor General’s staff for their exemplary professionalism and courtesy during the multiple visits to
our District. We are extremely pleased with the overall assessment, and agree with and will implement
the Audit’s findings and recommendations.
In its First Finding, the Performance Audit indicates that HUSD compares most favorably with its peer
districts in both student achievement and operational efficiencies. Following are some of the Performance
Audit conclusions for Finding #1:
Student Achievement higher than state and peer districts’ averages
The Auditor’s report strongly highlights that our student achievement is higher than both our peer districts
and state averages. In fiscal year 2010, the percentage of District students who met or exceeded state
standards in math, reading and writing was higher than the state and peer districts’ averages. The
District’s 82% high school graduation rate was also higher than the peer group average of 80% and the
state average of 78%.
District operated efficiently in costs for administration and plant operations
The Auditor’s report reflects that HUSD has operated very efficiently, spending much less per student
than peer districts on administration and plant operations. In the area of administration, our costs were
26% lower per pupil than peer districts. The District spent less on administration due to the fact that it
employs fewer administrative staff and pays lower salaries for some administrative positions. In the area
of plant operations, our per-square-foot costs were 10% lower and our per-pupil-costs were 20% lower
compared to our peer district averages. The Audit further underscores that our Food Service and
Transportation programs have operated with great efficiency in providing much lower costs per meal and
transporting students with a much lower cost per mile and cost per rider. We would like to state that this
was accomplished with a complete focus on the needs of the students whom we serve.
Under Finding #2, the Performance Audit recommends that the District, a) Strengthen its controls relative
to its computer systems and, b) Formalize a disaster recovery plan in the case of a system or equipment
MARIELA KATHLEEN BEAN, PUBLIC RELATIONS/LANGUAGE ACQUISITION DIRECTOR
OFFICE 928.759.5016 • FAX 928.759.4044 • CELL 928.830.1952
HUMBOLDT UNIFIED SCHOOL DISTRICT #22
6411 N. ROBERT ROAD, PRESCOTT VALLEY, AZ 86314 • PHONE 928.759.4000  FAX 928.759.4020
failure and/or interruption.
Finally, it is essential to point out that the high student achievement and efficient operation of the district
is directly associated with our outstanding teaching, support and administrative staff. The difficult
Arizona economic conditions directly impacting our district have not deterred them in the least from
executing exemplary service and work on behalf of our students. We are grateful for all of our
employees.
Once again, we thank you for your thorough and diligent review. The Humboldt Unified School District
is steadfast in its commitment to being a good steward of our financial resources and to strengthening our
academic and business systems.
Sincerely,
Dr. Paul Stanton, Superintendent

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Performance Audit
Humboldt Unified
School District
Division of School Audits
Debra K. Davenport
Auditor General
July • 2012
Report No. 12-07
A REPORT
TO THE
ARIZONA LEGISLATURE
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators and
five representatives. Her mission is to provide independent and impartial information and specific recommendations to improve the
operations of state and local government entities. To this end, she provides financial audits and accounting services to the State and
political subdivisions, investigates possible misuse of public monies, and conducts performance audits of school districts, state
agencies, and the programs they administer.
The Joint Legislative Audit Committee
Audit Staff
Ross Ehrick, Director
Mike Quinlan, Manager and Contact Person
Judy Fitzgerald
Chris Moore
Brian Smith
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
Representative Carl Seel, Chair
Representative Tom Chabin
Representative Justin Olson
Representative David Stevens
Representative Anna Tovar
Representative Andy Tobin (ex officio)
Senator Rick Murphy, Vice Chair
Senator Andy Biggs
Senator Rich Crandall
Senator Linda Lopez
Senator David Lujan
Senator Steve Pierce (ex officio)
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
MELANIE M. CHESNEY
DEPUTY AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
July 9, 2012
Members of the Arizona Legislature
The Honorable Janice K. Brewer, Governor
Governing Board
Humboldt Unified School District
Dr. Paul Stanton, Superintendent
Humboldt Unified School District
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Humboldt
Unified School District, conducted pursuant to A.R.S. §41-1279.03. I am also transmitting within
this report a copy of the Report Highlights for this audit to provide a quick summary for your
convenience.
As outlined in its response, the District agrees with all of the findings and recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on July 10, 2012.
Sincerely,
Debbie Davenport
Auditor General
In fiscal year 2010, Humboldt USD
operated efficiently with lower operational
costs than peer districts. The table on
page 2 highlights the District’s efficiencies
in each of the operational areas.
Much lower administrative costs—
Humboldt USD’s administration operated
efficiently with costs that were 26 percent
lower per pupil than peer districts’, on
average. These costs were lower primarily
because the District employed fewer
administrative staff at its schools and paid
lower salaries for some administrative
positions. Humboldt USD’s lower staffing
was primarily in administrative support
positions at school sites, including
administrative secretaries and
District operated efficiently
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
Higher student achievement and efficient operations
Our Conclusion
In fiscal year 2010,
Humboldt Unified School
District’s student
achievement was higher
than both its peer districts’
and state averages, and
the District operated
efficiently. The District’s
per-pupil costs in
administration and plant
operations were much
lower than peer districts’,
and although its per-pupil
costs for food service and
transportation were similar
to peer districts’, it
operated these programs
efficiently with lower costs
per meal and lower costs
per mile and per rider. The
District generally has lower
staffing levels and salaries
than peer districts’ and
has implemented many
effective techniques and
practices to help keep its
costs low and programs
operating efficiently.
However, the District
needs to strengthen
controls over its computer
systems.
Student achievement higher than
peers’ and state averages—In fiscal year
2010, Humboldt USD’s student AIMS
scores were higher than both peer
districts’ and state averages. Further, eight
of the District’s nine schools met
“Adequate Yearly Progress” for the federal
No Child Left Behind Act, and the
District’s 82-percent high school
graduation rate was slightly higher than
the peer districts’ average of 80 percent
and the state average of 78 percent.
District operated efficiently with costs
lower than or similar to peer districts’—
In fiscal year 2010, Humboldt USD
operated efficiently with per-pupil costs
that were lower than or similar to peer
districts’ costs in all operational areas. The
District’s administration and plant
operations costs were much lower than its
peer districts averaged. Further, although
the District’s per-pupil costs for food
service and transportation were similar to
peer districts, Humboldt USD operated
these programs efficiently with lower costs
per meal and lower costs per mile and per
rider than peer districts.
Operating efficiently allowed the District to
spend more of its available resources for
instructional purposes, which was
especially important for Humboldt USD
because the District’s fiscal year 2010
per-pupil operational spending of $6,432
was $664 less per pupil than its peer
districts’ and one of the lowest per-pupil
spending amounts in the State. Humboldt
USD had less money available primarily
because it did not receive additional
funding through voter-approved budget
overrides to increase its budget and
chose to budget less of its capital monies
for operational purposes.
2012
July • Report No. 12-07
Humboldt Unified
School District
Operational
Area
Humboldt
USD
Peer Group
Average
Administration $556 $748
Plant operations 697 874
Food service 328 322
Transportation 380 396
Per-Pupil Expenditures by
Operational Area
Fiscal Year 2010
Percentage of Students Who Met or
Exceeded State Standards (AIMS)
Fiscal Year 2010
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Math Reading Writing
Humboldt USD Peer Group State-wide
Humboldt USD needs to improve controls over its
computer systems in three ways. First, the District
needs to separate the incompatible job duties of
having the system administrator for the accounting
system also be a user of the system. Second, the
District needs to strengthen password requirements.
Third, the District needs to develop and implement
a disaster recovery plan. Although no improper
transactions were detected in the sample we
reviewed, these improvements are necessary to
help prevent fraud and abuse, protect sensitive
information, and ensure continuity of operations in a
disaster.
Recommendations—The District should:
••Separate the system administrator duties from
the business office functions.
••Implement and enforce password requirements.
••Create and implement a formal IT disaster
recovery plan.
District needs to strengthen controls over its computer systems
receptionists. Further, Humboldt USD’s high-level
administrators, such as the superintendent,
business manager, and principals, were paid less
despite generally having a similar number of years
of experience in their respective positions as the
audited peer districts’ administrators.
Efficient plant operations—Humboldt USD’s plant
operations costs were 10 percent lower per square
foot and 20 percent lower per student than peer
districts’. These lower costs were primarily because
of lower staffing levels, lower salaries, and lower
energy costs.
Efficient food service program—Humboldt USD’s
$2.19 cost per meal was much lower than the peer
districts’ average of $2.66 per meal. By maintaining
a low cost per meal, the District was able to cover
all of its program costs, while having enough
monies remaining to help pay for some indirect
costs, such as utilities. The lower costs were
primarily the result of lower food costs, which the
District has helped keep low by implementing
several effective cost-controlling techniques.
Specifically:
••Fully use commodities—To help take full
advantage of the commodities program, the
District purchased an additional freezer and
created additional dry storage space so that
it can receive large amounts of commodities.
Further, the District requests and accepts
additional commodities when they become
available.
••Prepare menus to use available food
inventory—The District reviews its food
inventory and modifies the cafeteria menus to
minimize food waste and limit the purchase of
noncommodity food items.
••Offer some every-day menu options—Although
the District offers five or six meal choices to
students on a daily basis, it is still able to keep
its costs low by limiting food waste. Several
of the same meal options are offered every
day and some of these every-day options are
the type of meals that can be refrigerated until
needed and served the following day if unsold.
••Monitor meal demand to limit waste—The
District monitors the number of meals produced
and served by specific meal type and uses
this information to determine the appropriate
amount of food items to order and the number
of meals to prepare the next time specific meals
are served.
Efficient transportation program—Humboldt
USD’s transportation program operated efficiently
with a $2.36 cost per mile that was 31 percent lower
than the peer districts’ and a $709 cost per rider
that was 24 percent lower than the peer districts’.
These lower costs were primarily the result of lower
salaries, repair and maintenance costs, and fuel
costs.
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
July 2012
A copy of the full report is available at:
www.azauditor.gov
Contact person:
Mike Quinlan (602) 553-0333
Humboldt Unified
School District
Efficiency Measure
Humboldt
USD
Peer
Group
Average
Administrative cost per pupil $556 $748
Plant operations cost per square foot 5.11 5.70
Food service cost per meal 2.19 2.66
Transportation cost per mile 2.36 3.40
Transportation cost per rider 709 937
Comparison of Efficiency Measures
Fiscal Year 2010
TABLE OF CONTENTS
continued
page i
Office of the Auditor General
District Overview 1
Student achievement higher than state and peer districts’ averages 1
District operated efficiently with costs lower than or similar to peer districts’ 1
Finding 1: District operated efficiently 3
Much lower administrative costs 3
Efficient plant operations 3
Efficient food service program 4
Efficient transportation program and proper controls over fuel purchase cards 5
Finding 2: District needs to strengthen controls over its computer
systems 7
Business office employee has incompatible job duties 7
Password requirements need to be strengthened 7
Lack of disaster recovery plan could result in interrupted operations or loss of data 8
Recommendations 8
Appendix
Objectives, Scope, and Methodology a-1
District Response
TABLE OF CONTENTS
concluded
page ii
State of Arizona
Tables
1 Per-Pupil Expenditures by Operational Area
Fiscal Year 2010
(Unaudited) 2
2 Comparison of Efficiency Measures
Fiscal Year 2010
(Unaudited) 3
Figure
1 Percentage of Students Who Met or Exceeded State Standards (AIMS)
Fiscal Year 2010
(Unaudited) 1
page 1
Office of the Auditor General
DISTRICT OVERVIEW
Humboldt Unified School District is located near Prescott in Yavapai County. In fiscal year 2010, the
District served 5,877 students at its nine schools: five kindergarten-through-6th-grade elementary
schools, two 7th-through-8th-grade middle schools, one 9th-through-12th-grade high school, and
one kindergarten-through-8th-grade traditional school.
Overall, in fiscal year 2010, Humboldt USD compared favorably with peer districts in both student
achievement and operational efficiencies.1 The District’s student achievement was higher than both
its peer districts’ and state averages. Additionally, it operated efficiently, spending much less per
student than peer districts on administration and plant operations. Further, its food service program
operated efficiently with a much lower cost per meal, and its transportation program was efficient with
a much lower cost per mile and cost per rider. The District’s overall per-pupil spending was also lower
than the state and peer districts’ averages.
Student achievement higher than state and peer districts’ averages
In fiscal year 2010, 66 percent of the District’s students met or exceeded state standards in math, 82
percent in reading, and 78 percent in writing. As shown in Figure 1, these scores were higher than
the state and peer districts’ averages. Further, eight of the District’s nine schools met “Adequate
Yearly Progress” (AYP) for the federal No Child Left Behind Act. Humboldt USD’s high school failed
to meet AYP because some students did not demonstrate sufficient academic progress and its
76-percent high school graduation rate in fiscal year 2009 was below the target rate. The District’s
82-percent high school graduation rate in fiscal year
2010 was slightly higher than the peer group average of
80 percent and also higher than the state average of 78
percent.
District operated efficiently with costs
lower than or similar to peer districts’
As shown in Table 1 on page 2, in fiscal year 2010,
Humboldt USD operated with much lower per-pupil
costs in administration and plant operations than its
peer districts’. Further, although the District’s per-pupil
1 Auditors developed two peer groups for comparative purposes. See page a-1 of this report’s Appendix for further explanation of the peer
groups.
Figure 1: Percentage of Students Who Met or
Exceeded State Standards (AIMS)
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2010 test results
on Arizona’s Instrument to Measure Standards (AIMS).
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Math Reading Writing
Humboldt USD
Peer Group
State-wide
page 2
State of Arizona
costs for food service and transportation were similar to peer
districts, Humboldt USD operated these programs efficiently
with lower costs per meal and lower costs per mile and per rider
than peer districts. Operating efficiently allowed the District to
spend more of its available resources for instructional purposes,
which was especially important for Humboldt USD because the
District’s fiscal year 2010 per-pupil operational spending of
$6,432 was $664 less per pupil than its peer districts’ and one
of the lowest per-pupil spending amounts in the State. Humboldt
USD had less money available primarily because it did not
receive additional funding through voter-approved budget
overrides to increase its budget and chose to budget less of its
capital monies for operational purposes. In fiscal year 2010,
Humboldt USD spent 57.5 percent of its available operating
dollars in the classroom compared to the 54.8-percent peer
district average and 55.9-percent state average.
Much lower administrative costs—Humboldt USD’s
administrative costs were 26 percent lower per pupil than peer districts averaged—$556
compared to $748. The District spent less on administration primarily because it employed
fewer administrative staff and paid some administrators lower salaries (see Finding 1, page
3).1 The District should, however, strengthen some of its computer controls (see Finding 2,
page 7).
Efficient plant operations—The District’s plant operations cost of $5.11 per square foot
was 10 percent lower than the peer districts’ average and its $697-per-student cost was 20
percent lower. The District spent less on plant operations primarily because it staffed fewer
plant employees and paid lower salaries. Further, the District’s energy costs were lower likely
because of its efforts to control electricity consumption (see Finding 1, page 3).
Efficient food service program—Although it spent a similar amount per pupil for food
service as its peer districts, Humboldt USD’s food service program operated efficiently with
a cost per meal of $2.19, which was much lower than the peer district’s average of $2.66. The
District controlled costs and maintained a self-sufficient program by fully using federal
commodities and closely monitoring the program (see Finding 1, page 3).
Efficient transportation program—Although it spent a similar amount per pupil for
transportation as its peer districts, Humboldt USD’s transportation costs were 31 percent
lower per mile and 24 percent lower per rider. Further, the District’s routes were reasonably
efficient, filling buses to 75 percent of seat capacity, on average. The District’s much lower
costs were primarily due to lower pay rates, low costs associated with bus repair and
maintenance, and lower fuel costs. Additionally, the District maintained proper controls over
its fuel purchase cards (see Finding 1, page 3).
1 Within the 11-district efficiency peer group, auditors compared staffing levels, salaries, and longevity among a 6-district subset that
was subject to performance audits for their fiscal year 2010 operations.
Spending
Humboldt
USD
Peer
Group
Average
State
Average
Total per pupil $6,432 $7,096 $7,609
Classroom dollars 3,700 3,889 4,253
Nonclassroom
dollars
Administration 556 748 721
Plant operations 697 874 914
Food service 328 322 366
Transportation 380 396 342
Student support 485 578 581
Instructional
support 286 289 432
Table 1: Per-Pupil Expenditures by
Operational Area
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2010 Arizona
Department of Education student membership data
and district-reported accounting data.
page 3
Office of the Auditor General
District operated efficiently
In fiscal year 2010, Humboldt USD operated efficiently with lower operational costs than peer
districts. The District attained these lower costs primarily by employing fewer staff, paying lower
salaries, and closely monitoring its operations. As shown in Table 2, the District’s efficiency measures
compared favorably to its peer districts. These
low operational costs allowed the District to
spend a similar amount as peer districts spent
in the classroom even though its overall
per-pupil spending was one of the lowest in
the State.
Much lower administrative costs
Humboldt USD’s administration operated
efficiently with costs that were 26 percent lower
per pupil than peer districts’, on average. The
District was able to operate with lower
administrative costs primarily because it
employed fewer administrative staff at its schools and paid lower salaries for some administrative
positions. Humboldt USD employed one administrative full-time equivalent (FTE) position for every
106 students while the peer districts employed one FTE for every 95 students, on average. Humboldt
USD’s lower staffing was primarily in administrative support positions at school sites, including
administrative secretaries and receptionists. Further, in reviewing detailed information for the six
audited peer districts, Humboldt USD’s high-level administrators, such as the superintendent,
business manager, and principals, were paid less despite generally having a similar number of years
of experience in their respective positions as the audited peer districts’ administrators.
Efficient plant operations
Humboldt USD’s plant operations were efficient with lower costs per square foot and per student
than the peer districts’. Its $5.11 cost-per-square-foot was 10 percent lower than the peer districts’
and its cost per student was 20 percent lower. The District’s lower costs were primarily because of
lower staffing levels, lower salaries, and lower energy costs.
FINDING 1
Efficiency Measure
Humboldt
USD
Peer
Group
Average
Administrative cost per pupil $556 $748
Plant operations cost per square foot 5.11 5.70
Food service cost per meal 2.19 2.66
Transportation cost per mile 2.36 3.40
Transportation cost per rider 709 937
Table 2: Comparison of Efficiency Measures
Fiscal Year 2010
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2010 district-reported
accounting and food service program data; Arizona School Facilities
Board square footage information; and Arizona Department of
Education student membership and transportation program data.
page 4
State of Arizona
Fewer staff and lower salaries—In fiscal year 2010, the District employed 53 FTE plant
operations positions, or 1 full-time plant employee for every 15,041 square feet. The five other
peer districts that did not outsource janitorial and grounds maintenance employed an average
of 1 full-time plant employee for every 12,874 square feet. Further, Humboldt USD’s average
plant operations employee salary was 21 percent lower than these peer districts’.
Lower energy costs—The District’s per-square-foot energy costs were 9 percent lower than
peer districts’, in part because of its following efforts to control electricity usage. Specifically:
•• Monitoring energy usage—The District prepares monthly reports of electricity costs and
usage by campus to help monitor energy usage. The District’s plant operations employees
closely monitor these reports, comparing monthly usage over the past several years, and
investigate any unusual spikes in electricity consumption to determine if the cause might
be something correctable such as poorly operating cooling and heating equipment.
•• Upgrading to energy-efficient equipment—The District made several upgrades to
improve energy efficiency in some buildings, including installing more energy-efficient
lighting, replacing heating and air conditioning units, and installing occupancy sensors
that turn lights on and off depending on whether someone is in the room.
•• Other conservation efforts—The District has also undertaken other efforts to reduce
energy costs, including using natural lighting when possible and installing a program that
automatically shuts off its computers at the end of the day.
Efficient food service program
In fiscal year 2010, the District’s $2.19 cost per meal was much lower than the peer group
average of $2.66 per meal. By maintaining a low cost per meal, the District was able to cover all
of its program costs, while having enough monies remaining to help pay for some indirect costs,
such as utilities. The District’s lower costs were primarily the result of lower food costs, and the
District has implemented several effective techniques and practices for controlling cost.
Specifically:
•• Fully use commodities—The District helps keep its food costs low by fully using United
States Department of Agriculture (USDA) food commodities. Districts participating in the
National School Lunch Program can obtain USDA commodities by paying only a small
shipping charge. Districts receive allocations of USDA commodities based on student meal
participation in the prior year and may also obtain additional available commodities not
used by other participants or when the USDA has large surpluses. To help take full
advantage of the commodities program, the District purchased an additional freezer and
created additional dry storage space so that it can receive large amounts of commodities.
In fiscal year 2010, the District received over $156,000 worth of food commodities. This was
nearly $30,000 more than its allocation of commodities because the District requested and
page 5
Office of the Auditor General
accepted additional commodities when they became available. During fiscal year 2010, the
value of the commodities the District received was 20 percent more than peer districts’ on a
per-meal basis.
•• Prepare menus to use available food inventory—The District reviews its food inventory and
modifies the cafeteria menus to minimize food waste and limit the purchase of food items.
•• Offer some every-day menu options—Although the District offers five or six meal choices to
students on a daily basis, it is still able to keep its costs low by limiting food waste. Auditors have
found that offering many options increased costs at some other districts. However, Humboldt
USD has managed to keep its food costs low by offering several of the same meal options every
day and some of these every-day options are the type of meals that can be refrigerated until
needed and served the following day if unsold.
•• Monitor meal demand to limit waste—Humboldt USD’s schools each prepares daily
production records that identify the number of meals planned and served by menu option. The
District uses these daily production records to determine the appropriate amount of food items
to order and the number of meals to prepare the next time specific meal options are served.
This helps to limit food and production costs by making only what is needed, and limiting waste.
Efficient transportation program and proper controls over fuel
purchase cards
The District’s transportation program operated efficiently with a $2.36 cost per mile that was 31
percent lower than its peer districts’ and a $709 cost per rider that was 24 percent lower than the
peer districts’. Humboldt USD’s lower costs were primarily the result of lower salaries, repair and
maintenance costs, and fuel costs. Further, the District’s routes were reasonably efficient, filling
buses to 75 percent of seat capacity, on average.
Lower salaries—On average, the District paid its bus drivers and mechanics lower pay rates than
the six audited peer districts’. Bus drivers were paid about 10 percent less and mechanics were
paid about 13 percent less.
Lower repair and maintenance costs—The District’s mechanics stated that they make every
effort to perform nearly all bus maintenance and repairs in-house, thereby reducing costs for
maintenance and repair services. Auditors noted that although the District’s buses averaged a
similar age as peer districts’, Humboldt USD spent 43 percent less per mile for bus repair and
maintenance costs.
Proper controls over fuel purchase cards—The District has proper controls over its fuel
cards and closely monitors their usage. The District uses fuel cards to fuel its buses with a local
vendor. To help ensure fuel charges are proper, each fuel card is assigned to a specific bus, and
the driver is required to input the bus number, odometer reading, and a unique and confidential
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State of Arizona
personal identification number when purchasing fuel. The District monitors fuel purchases on
a daily basis by reviewing the transactions on the vendor’s Web site for any unusual purchases.
Further, when the bi-weekly billing is received, transportation staff verify that all transactions
are supported by receipts turned in by drivers. Additionally, the vendor’s system provides the
District with the average miles per gallon for each of its buses, which staff review for
reasonableness and investigate discrepancies.
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Office of the Auditor General
District needs to strengthen controls over its computer
systems
Humboldt USD needs to improve controls over its computer systems in three ways. First, the District
needs to separate the incompatible job duties of having the system administrator for the accounting
system also be a system user. Second, the District needs to strengthen password requirements.
Third, the District needs to develop and implement a disaster recovery plan. Although no improper
transactions were detected in the sample auditors reviewed, these improvements are necessary to
help prevent fraud and abuse, protect sensitive information, and ensure continuity of operations in a
disaster.
Business office employee has incompatible job duties
The district employee who is responsible for administering the District’s accounting system is also a
user of the system as the payroll clerk. As the system administrator, this person has access to all
functions and settings within the accounting system, including adding and modifying employee
information and changing pay rates. In situations where one employee has such access and is also
responsible for processing payroll, there is a greater risk that unauthorized changes, such as
creating fictitious employees or changing employee pay rates, could go unnoticed. Auditors scanned
all employees’ fiscal year 2010 pay for reasonableness and reviewed detailed payroll and personnel
records for 30 of the District’s 921 employees who were paid at least $1,500 and noted no improper
transactions. However, this user access weakens controls that help protect the District against errors,
fraud, and misuse. The District should separate the system administrator duties from the business
office functions and consider assigning the system administrator duties to someone who is not a
user of the system.
Password requirements need to be strengthened
The District needs stronger password requirements for its network, student information system, and
accounting system. Although users generally develop their own passwords, the District has not
established complexity requirements—that is, passwords do not need to be a minimum length or
FINDING 2
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State of Arizona
contain numbers or symbols. Further, users are not prompted to periodically change passwords.
Common practice requires passwords to be at least eight characters, contain a combination of
alphabetic and numeric characters, and be changed every 90 days. These practices would
decrease the risk of unauthorized persons gaining access to the systems.
Lack of disaster recovery plan could result in interrupted
operations or loss of data
The District does not have a formal, up-to-date, and tested disaster recovery plan, even though
it maintains critical financial and student information on its systems and network. A written and
properly designed disaster recovery plan would help ensure continued operations in the case of
a system or equipment failure or interruption. Although the District stores some backup
information offsite, some critical data is stored on storage devices next to the District’s servers.
Further, the District has not attempted to restore data on an offsite system to ensure the
completeness and integrity of its data backup. Disaster recovery plans should be tested
periodically, and modifications should be made to correct any problems and ensure their
effectiveness.
Recommendations
1. The District should separate the system administrator duties from the business office
functions and consider assigning the system administrator duties to someone who is not
a user of the system.
2. The District should implement and enforce password requirements related to password
length, complexity, and expiration.
3. The District should create a formal disaster recovery plan and test it periodically to identify
and remedy any deficiencies. Additionally, all backup tapes should be stored in a secure
offsite location.
APPENDIX
page a-1
Office of the Auditor General
Objectives, Scope, and Methodology
The Office of the Auditor General has conducted a performance audit of the Humboldt Unified
School District pursuant to A.R.S. §41-1279.03(A)(9). Based in part on their effect on classroom
dollars, as previously reported in the Auditor General’s annual report, Arizona School District
Spending (Classroom Dollars report), this audit focused on the District’s efficiency and effectiveness
in four operational areas: administration, plant operations and maintenance, food service, and
student transportation. To evaluate costs in each of these areas, only current expenditures, primarily
for fiscal year 2010, were considered.1 Further, because of the underlying law initiating these
performance audits, auditors also reviewed the District’s use of Proposition 301 sales tax monies and
how it accounted for dollars spent in the classroom.
In conducting this audit, auditors used a variety of methods, including examining various records,
such as available fiscal year 2010 summary accounting data for all districts and Humboldt USD’s
fiscal year 2010 detailed accounting data, contracts, and other district documents; reviewing district
policies, procedures, and related internal controls; reviewing applicable statutes; and interviewing
district administrators and staff.
To analyze Humboldt USD’s operational efficiency, auditors selected a group of peer districts based
on their similarities in district size, type, and location. This operational peer group includes Humboldt
USD and the ten other unified and union high school districts that also served between 2,000 and
7,999 students and were located in cities and suburbs. Within this operational peer group, auditors
developed a subset of six districts that were subject to a performance audit for their fiscal year 2010
operations. Auditors compared the more detailed accounting, staffing level, and longevity data that
was available for these districts. To compare districts’ academic indicators, auditors developed a
separate student achievement peer group using poverty as the primary factor because poverty has
been shown to be strongly related to student achievement. Auditors also used secondary factors
such as district type, size, and location to further refine these groups. Humboldt USD’s student
achievement peer group includes Humboldt USD and the 21 other unified districts that also served
student populations with poverty rates between 17 and 23 percent. Additionally:
•• To assess the District’s student achievement, auditors reviewed the Arizona’s Instrument to
Measure Standards (AIMS) passing rates, “Adequate Yearly Progress” for the federal No Child
Left Behind Act, and high school graduation rates. AIMS passing rates were compared to the
state-wide average and the average of the student achievement peer districts.
1 Current expenditures are those incurred for the District’s day-to-day operations. They exclude costs associated with repaying debt, capital
outlay (such as purchasing land, buildings, and equipment), and programs such as adult education and community service that are outside
the scope of preschool through grade-12 education.
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State of Arizona
•• To assess whether the District’s administration effectively and efficiently managed district
operations, auditors evaluated administrative procedures and controls at the district and
school level, including reviewing personnel files and other pertinent documents and
interviewing district and school administrators about their duties. Auditors also reviewed
and evaluated fiscal year 2010 administration costs and compared these to peer districts’.
•• To assess whether the District’s plant operations and maintenance function was managed
appropriately and functioned efficiently, auditors reviewed and evaluated fiscal year 2010
plant operations and maintenance costs and district building space, and compared these
costs and capacities to peer districts’.
•• To assess whether the District’s food service program was managed appropriately and
functioned efficiently, auditors reviewed fiscal year 2010 food service revenues and
expenditures, including labor and food costs; compared costs to peer districts’; reviewed
the Arizona Department of Education’s food service monitoring reports; and observed food
service operations.
•• To assess whether the District’s transportation program was managed appropriately and
functioned efficiently, auditors reviewed and evaluated required transportation reports, driver
files, bus maintenance and safety records, bus routing, and bus capacity usage. Auditors
also reviewed fiscal year 2010 transportation costs and compared them to peer districts’.
•• To assess the District’s computer information systems and network, auditors evaluated certain
controls over its logical and physical security, including user access to sensitive data and critical
systems, and the security of servers that house the data and systems. Auditors also evaluated
certain district policies over the system such as data sensitivity, backup, and recovery.
•• To assess whether the District was in compliance with Proposition 301’s Classroom Site
Fund requirements, auditors reviewed fiscal year 2010 expenditures to determine whether
they were appropriate and the District properly accounted for them. Auditors also reviewed
the District’s performance pay plan and analyzed how performance pay was being
distributed. No issues of noncompliance were identified.
•• To assess the District’s financial accounting data, auditors evaluated the District’s internal
controls related to expenditure processing and scanned all payroll and accounts payable
transactions for proper account classification and reasonableness. Additionally, auditors
reviewed detailed payroll and personnel records for 30 of the 921 employees who were paid
at least $1,500 and reviewed supporting documentation for 30 of 16,521 accounts payable
transactions. After adjusting transactions for proper account classification, auditors reviewed
fiscal year 2010 spending and prior years’ spending trends across operational areas. Auditors
also evaluated other internal controls that were considered significant to the audit objectives.
We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
The Auditor General and her staff express their appreciation to the Humboldt Unified School
District’s board members, superintendent, and staff for their cooperation and assistance
throughout the audit.
DISTRICT RESPONSE
DISTRICT RESPONSE
MARIELA KATHLEEN BEAN, PUBLIC RELATIONS/LANGUAGE ACQUISITION DIRECTOR
OFFICE 928.759.5016 • FAX 928.759.4044 • CELL 928.830.1952
HUMBOLDT UNIFIED SCHOOL DISTRICT #22
6411 N. ROBERT ROAD, PRESCOTT VALLEY, AZ 86314 • PHONE 928.759.4000  FAX 928.759.4020
June 25, 2012
Ms. Debra K. Davenport
Auditor General
2910 North 44th Street, Suite 410
Phoenix, Arizona 85018
Dear Ms. Davenport:
The Humboldt Unified School District respectfully submits its response to the Performance Audit
conducted by the Office of the Auditor General for the 2010 Fiscal Year. The District would like to thank
the Auditor General’s staff for their exemplary professionalism and courtesy during the multiple visits to
our District. We are extremely pleased with the overall assessment, and agree with and will implement
the Audit’s findings and recommendations.
In its First Finding, the Performance Audit indicates that HUSD compares most favorably with its peer
districts in both student achievement and operational efficiencies. Following are some of the Performance
Audit conclusions for Finding #1:
Student Achievement higher than state and peer districts’ averages
The Auditor’s report strongly highlights that our student achievement is higher than both our peer districts
and state averages. In fiscal year 2010, the percentage of District students who met or exceeded state
standards in math, reading and writing was higher than the state and peer districts’ averages. The
District’s 82% high school graduation rate was also higher than the peer group average of 80% and the
state average of 78%.
District operated efficiently in costs for administration and plant operations
The Auditor’s report reflects that HUSD has operated very efficiently, spending much less per student
than peer districts on administration and plant operations. In the area of administration, our costs were
26% lower per pupil than peer districts. The District spent less on administration due to the fact that it
employs fewer administrative staff and pays lower salaries for some administrative positions. In the area
of plant operations, our per-square-foot costs were 10% lower and our per-pupil-costs were 20% lower
compared to our peer district averages. The Audit further underscores that our Food Service and
Transportation programs have operated with great efficiency in providing much lower costs per meal and
transporting students with a much lower cost per mile and cost per rider. We would like to state that this
was accomplished with a complete focus on the needs of the students whom we serve.
Under Finding #2, the Performance Audit recommends that the District, a) Strengthen its controls relative
to its computer systems and, b) Formalize a disaster recovery plan in the case of a system or equipment
MARIELA KATHLEEN BEAN, PUBLIC RELATIONS/LANGUAGE ACQUISITION DIRECTOR
OFFICE 928.759.5016 • FAX 928.759.4044 • CELL 928.830.1952
HUMBOLDT UNIFIED SCHOOL DISTRICT #22
6411 N. ROBERT ROAD, PRESCOTT VALLEY, AZ 86314 • PHONE 928.759.4000  FAX 928.759.4020
failure and/or interruption.
Finally, it is essential to point out that the high student achievement and efficient operation of the district
is directly associated with our outstanding teaching, support and administrative staff. The difficult
Arizona economic conditions directly impacting our district have not deterred them in the least from
executing exemplary service and work on behalf of our students. We are grateful for all of our
employees.
Once again, we thank you for your thorough and diligent review. The Humboldt Unified School District
is steadfast in its commitment to being a good steward of our financial resources and to strengthening our
academic and business systems.
Sincerely,
Dr. Paul Stanton, Superintendent